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**MNI 5 Things: US Core PCE Prices +0.2%; Y/Y Up To +1.6%>

--5 Things We Learned From February Personal Income Data
By Kevin Kastner, Holly Stokes, and Sara Haire
     WASHINGTON (MNI) - The following are the key points from the 
February personal income, spending, and price data released Thursday by 
the Bureau of Economic Analysis: 
     - The data suggest inflation remains contained, but there were 
modest upward movements to the year/year rates. However, core inflation, 
income, and PCE were all on expectations, so the market reaction is 
likely to be muted. 
     - The core PCE price index rose 0.2%, (+0.228% unrounded), as 
expected, after a 0.3% gain (+0.288%) in January. The y/y rate ticked up 
to 1.6% after holding at 1.5% in the previous four months. The rate is 
the highest since April, but still well below the 1.9% rate in the same 
month a year ago. The overall PCE price index also rose 0.2% after a 
0.4% January gain, as energy prices fell by 0.1% in the current month. 
The y/y rate rose to 1.8% after 1.7% gains in the last three months. 
     - The savings rate rose to 3.4%, its highest since August 2017, up 
from 3.2% in January and 2.4% in December, but it remains well below the 
4.1% rate a year ago. Some analysts note that the declines in the 
savings rate over the last year have been key in supporting consumption, 
as consumers are confident enough about the economy and the job market 
to shift from saving to spending. However, an MNI analysis Wednesday 
suggests that much of that spending is coming via credit cards rather 
than excess cash. 
     - Personal income rose 0.4%, as expected, led by another solid 
increase in wages and salaries and gains in proprietors' income, income 
on assets, and rental income. Personal taxes rose 0.7% after a 3.2% drop 
in January, so disposable personal income posted a more modest 0.4% 
increase after a 1.0% jump in January. 
     - Current dollar PCE was up 0.2%, as expected. Real PCE was flat 
after a 0.2% decline in January, so the first quarter average was up 
only 0.6% at an annual rate from the fourth quarter. PCE was up 4.0% in 
the fourth quarter GDP report. 
     ** MNI Washington Bureau: 202-371-2121 ** 

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